Pound wobbles as UK GDP growth is revised lower for the second quarter

Emma Haslett
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The pound fell to a five-month low against the dollar ahead of the news (Source: Getty)

Mixed news from the Office for National Statistics, after its final estimate of UK GDP held second-quarter growth at 0.7 per cent, but revised year-on-year growth for the quarter down to 2.4 per cent, from the 2.6 per cent it originally thought.

The pound fell to a five-month low against the US dollar to $1.51 ahead of the figures.

However, there were encouraging signs, with households' disposable incomes rising two per cent on the previous quarter; 3.7 per cent on the same period a year before.

But the weak annual figure provided another suggestion that a much-anticipated interest rate rise may be held off for even longer.

"It is an extremely tight call as to whether the Bank of England lifts interest rates from 0.5 per cent to 0.75 per cent around February, or holds fire until nearer mid-2016," said Howard Archer, chief European and UK economist at IHS.

"Much will clearly depend on how well UK growth stands up over the coming months amid any hit to global growth from a Chinese slowdown and financial market volatility, how much the current weakness in oil and commodity markets weighs down on UK inflation, and how earnings growth and productivity develop.

"Sterling’s performance will also obviously be an important factor, as the stronger it is the more the potential dampening impact on UK growth and inflation."

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